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Wednesday, September 10, 2014

You've made a great product. You've defined your market
segment, crafted compelling positioning ensuring competitive advantage, and identified
perfect pricing strategy for the product in a clear and relevant way. And now
you are ready to take the product to the market.

Ahhh…. You realize that the marketing plan is built around a
traditional guide with a bunch of conventional methods risking the product
launch, a critical time for any company, the success of which can determine
your product’s survival. And now you want to carefully examine the marketing plan of your product one last time for marketing mix to
ensure success of the product.

The marketing mix is a business tool used for marketing
products and services, to determine the product or brand’s offering, and is
often associated with the four P's: Product, Price, Place and Promotion, extending to three more P’s: People, Process and Physical Evidence. Each “P” of
the marketing mix has its own significance and all of them should be evaluated altogether
for a perfect marketing plan. Applying this simple marketing tool enables you
to identify which activities are effective and under what circumstances,
enabling you to use them again when appropriate. Let’s take a look at each “P” and
see why they impact the product, and what are the points to consider for each of them.

7Ps
of Marketing Mix

Product

Price

Place

Promotion

What
is it

Any tangible good or an
intangible service that satisfies what a customer wants.

The amount customer pays in
exchange of the product or service

Refers to providing the
product at a place which is convenient for consumers to access.

Various strategies applied
to raise customer awareness of a product or brand, generating sales, and
creating brand loyalty.

Why
is it important

There is no point in making
a product that nobody wants to buy. Successful companies first find out what
the customer wants and then develop the right product.

The price of your product
is a cost to the customer and helps identify the importance of the product to
the customer.
An underpriced product loses excess additional money that the customer is
willing to pay for an existing product or service whereas on overpriced
product result into loss of sales and revenue.

Delivery performance is one
of the most important criteria when choosing a supplier.
Distribution channel members can provide greater efficiency in making the
availability of goods to the target markets through their contacts,
specialization, experience and scale of operation.

Ensure that:
1.The product provides desired
value to the customer
2.The product is a strategic fit to
the company’s product portfolio. It is an addition to the existing product
line or length.
3. Be cautious going too far on product quality and delay launch when the
customer is happy with ordinary product.
4. Develop a mechanism to regularly check what customers think of your
product, their usage pattern, their needs and wants.

1. The price should be
competitive but not necessarily cheap.
2. It is one of the ways to position your product in the market. The more
you charge, the more value or quality is expected by the customer.
3. Consider the pricing objectives of the product, be it market
penetration, company growth, survival or profit maximization, and offer the
product at a price suitable to the objective and has market acceptance.

1. The means of product or
service distribution should be appropriate and convenient to the customer.
2. The product must be available to the customer at the right place, at the
right time and with the right quality keep costs within acceptable level.
3. Distribution strategy for the product should be properly designed
considering various channel design, channel mix, channel management
etc.

1. Promotion should
communicate on the benefits that a customer obtains by use of the product and
not just the features of the product.
2. Whether the promotional material is a leaflet or complex brochure, it
must attract the customers. It should be easy to read and communicate WHY
they should buy the product.
3. Ensure that internal stakeholders are aware of the value and attributes
of the product so that they can re-share with the customers.

People

Process

Physical Evidence

What
is it

Everyone who contributes to
the product development. It includes each member of the cross-functional
team.

The processes and systems
within the organization that affect the delivery of product and / or
execution of service

The evidence which shows
that a service was performed, such as the delivery packaging for the item
delivered by a delivery service

Why
is it important

Customers make judgments
about product delivery and support based on the people representing your
organization.
Having the right people is essential because they are as much a part of
your business offering as the products/services you are offering.

Process is the way in which
a service is delivered to the end customer. Companies thrive on their quick
service and the reason they can do that is their confidence in their
processes.

The intangibility
associated with the service makes it risky business to be chosen for use.
Physical evidence helps potential customer “see” what they are buying.

Points
to consider

1. All members of the team
should must be appropriately trained, well motivated, and have the right
attitude.
2. The entire customer facing staff should not only be properly trained,
but also be the right kind of people for the job.
3. The support person becomes very critical to the consumer of the product
once it is sold, even more important than price in case of product lock-in
situation.
4. Consider undergoing accreditation for the staff to show your team better
than the rest.

1. All process should be
customer centric. Remember, the processes are designed to ease customer
interaction with the company or usage of the product.
2. Product / service should be supported by clearly defined and efficient
processes for leads, delivery, support and maintenance.
3. Have a product / service blue print providing details of the product /
service delivery process, often going down to even define the lead generation
/ service script and the greeting phrases to be used by the service
staff.

1. Physical evidence
demonstrated by the company must confirm the assumptions of the
customer.
2. Physical evidence should match the actual product to be purchased by the
customer.
3. Consider using physical evidence to use as a differentiator in service
marketing.

Each "P" of marketing mix is a key to success. None of
them can be considered in isolation. Though the last 2 Ps, i.e. Process and
Physical Evidence are important for service marketing, they are of equal
importance to products that requires customer lock-in before being produced.
Examples are apartments built by real-estate firms, expensive industrial grade
machines that require an upfront booking amount or product that are delivered
with the service.

An effective marketing strategy must be designed by doing a detailed
investigation of the market and segments. This is followed by a marketing audit
by conducting PESTEL analysis, various trends and company’s own position and
its resources. A marketing plan is then developed by defining budget,
objectives, targets and other KRAs. The marketing plan for new product launch
should be evaluated against the “points to consider” items and modified accordingly.
The marketing strategy should be then finalized with a specific plan of action,
only to be constantly monitored and updated as the marketing campaign progresses.

It’s your turn:

What do you think? How do you ensure that the marketing plan designed is suitable to the new product? Share your experience in the
comments box below

Wednesday, August 27, 2014

A few days ago, I posted a blog on Stage-gate model that received
lot of comments for suitability of the model to use in today’s world where companies
are under pressure to roll-out new products in shortest possible time-frame and constrained budgets.

While Stage-gate model has proved to be successful and
highly evolved model with 70%-80% companies using it for new product
development, it has also been criticized for being too linear, rigid and planned
as well as being non-adaptive. Product Managers are looking for more agile,
flexible and dynamic processes that put something in front of the customers and
involve them in early stages of new product development. The idea is to get
something out to the customers in the form of “virtual product” or “crude
working model” that they can feel, use and respond to providing useful insights
for product under development. Thus, the product might be less than half defined
while entering development stage, but it evolves by adapting to new information
and moved through development and testing. This change to stage-gate model is
what people know as “Agile Product Management”.

AGILE PRODUCT MANAGEMENT is a product development approach that
adds to Stage-gate model and reduces development time by eliminating undesired
dependencies, incorporating customer involvement in early stages of the product
thereby reducing the chances of product failure at launch.

Agile Product Management

Agile Product Management allows early kick-off for the development
stage (Stage 3) of the NPD process once identification of the CVP (Customer
Value Proposition) is completed in scoping stage with the intention to develop something
that the customer can see and provide feedback. It does not require Product
Managers to finish writing down Product Requirement Document enlisting detailed
feature set or wait for other departments to finish on their tasks. Rather, it allows
them to efficiently manage cross-functional teams working in parallel on tasks
of their domain.

While rest of the cross-functional team works toward other activities
of “scoping” and “business case” stages (market sizing, P&L projection, GTM
plan and more), product manager creates the story-board and requirements for first
(maybe few more) sprint cycle for the product development. While technical team
completes initial sprints, the product requirements are completely identified; TG2
gate is qualified, and product comes to visible and usable form. At this
juncture, QA team is involved in testing the product and analyzes the
suitability with the original value proposition.

Once the product comes to a usable form after few cycles of QA
testing, customers are involved for early stage testing and feedback to ensure
adherence to market requirements. Please mind that these customers are not open-market
customers but the internal customers from cross-functional groups, other
employees in the organization, friends and family members.

It is very likely that the final product that is
launched to the market is very different from what was targeted at the
beginning of first sprint. It is primarily because, over the time, more
features are added; more changes are done as recommendation from the work of
cross-functional teams for “scoping” and “business case” stages are incorporated.

Some of the benefits of using Agile Product Development
process are:

Reduced time to market

Reduced uncertainty and chances of launch failure

Eliminate undesired dependencies among cross-functional
groups

Early customer feedback

Deliver as fast as possible

Most efficient way to use Agile Product Development is to
customize the development and testing stage to progress in concurrence with “scoping”
and “business case” stage and best fit for the project goal. The sprints should
be planned to achieve maximum value from the product in early stages of
development. This will ensure delivering a stable and maintainable product that
satisfies your customer.

Wednesday, August 20, 2014

New Product
Development: is an organizational process that includes set of
activities required to deliver a new product to the market identified on the
basis of perception of market opportunity. Each organization has its own new
product development process and they make changes to it over the time learning
from experience and adapting to market standards. However, all of them
typically follow stage-gate model. According to several independent research
studies (i.e. Product Development & Management Association, AMR Research,
Booz-Allen Hamilton, etc.) between 70-85% of leading U.S. companies now use
Stage-Gate to drive new products to market.

Stage-gate model:

According to the official site of stage-gate model, “Stage-Gate®
is a value-creating business process and risk model designed to quickly and profitably
transform an organization's best new ideas into winning new products. When
embraced by organizations, it creates a culture of product innovation
excellence - product leadership, accountability, high-performance teams,
customer and market focus, robust solutions, alignment, discipline, speed and
quality.”

Stage-gate model

How it works:

Stage-Gate System is a conceptual and operational road map
for moving a new-product development from idea to launch. It is a product management technique in which
any product development process is divided into various stages separated by
gates.

Each stage consists of a set of activities and has to quality
corresponding gate to start with the activities of the next stage. The gates serve
as quality-control checkpoints with three goals: ensure quality of execution,
evaluate the business rationale, and approve the project plan and resources. At
each gate, the decision to continue product development is taken by the manager
or steering committee based on the analysis done till that stage or information
available at the time. The process is iterative in nature and product manager can
switch to any of the previous stages in case of failure to qualify through
appropriate gate.

Now, let’s discuss each stage-gate of new product
development in detail.

Stage 0: Idea
Discovery:

New ideas are be generated by using multiple approaches like:

Conducting marketing research to find out the
consumers' needs and wants.

Inviting suggestions from employees, consumers,
vendors and partners.

Brainstorming suggestions for new-product ideas.

Tracking global trends by searching in different
markets viz., national and international markets.

Exploring disruptive innovations to create new
products.

Tracking competitors for new products.

Ideas are screened for its uniqueness, market perception, and
competitive scenario to qualify Gate0.

Stage 1: Scoping:

In this stage, the gap analysis is done between customer
needs and available solutions. Once a gap is identified between customer needs
and existing products, a customer value proposition (CVP) is drafted. During
this time, the product manager conducts surveys and interviews with existing
and potential customers, along with staff members. This stage also lets product
manager initiate discussion with the vendor to establish a strategic
collaboration for the product development, support and launch. The Scoping
stage is concluded by preparing the market requirement document to qualify Gate
1.

This is the last phase of concept development where it is
crucial for product manager to perform a solid analysis before they begin
developing the product. This phase is generally difficult, complex, and
resource-intensive. To begin with this
stage, product definition and analysis are carried out by using the gap
analysis, market research to determine the market size and segmentation, growth
rate followed by competitive analysis. This will not only help you build a
great product, but will also help in determining how and where to launch your
new product.

Next, a technically feasible product concept is prepared,
often called PoC (Proof of concept). Once the technical feasibility is
established, the prototypes are developed and presented to staff and customers
to gain feedback and gauge customer reaction. An analysis of production and
operations cost along with the market and launch cost analysis is also carried
out in-parallel to PoC testing.

On completing the technical feasibility test, a business
case document for the product is prepared. This document set consists of:

Essentially the
execution stage of the product development, the most preferred process used is an
Agile methodology wherein the product manager shares user stories with the
project managers who specifies the product to be developed by the development
team. The development team maps out a realistic timeline with specific
milestones that are described as SMART: specific, measurable, actionable,
realistic, and time-bound. In the development phase, the product builds
momentum as more resources are committed to the project and makes full use of
cross-functional teamwork as the marketing, technical, manufacturing, and sales
departments all come together to offer their expert opinions.

The criteria to pass gate 3 are quality of work, adhering to
development timeline, product consistency with the original definition of the
product, and accepted maintenance cost of the product.

Stage 4: Testing
and Validation

This phase provides
validation for the product under development. A long list of tests is carried
out to validate the product including at least:

White box & Black box testing

Regression and Performance testing

User acceptance testing

Functional & Non-functional testing

Alpha Testing

Beta testing

The gate 4 is the final gate and opens the door for full
commercialization, i.e. market launch and full production of the product. Criteria
for passing gate 4 largely focus on test results, user experience, organizational
readiness for the product, and GTM execution.

Stage 5: Launch

Stage 5 involves execution of GTM (Go-to-market) strategy and
the operational plan. Industrial set-up for mass production of the product is
done, the distribution channel is established and the selling begins.

Post-launching the product, the product review plan is
executed focusing on the product performance measured mainly in terms of market
share, growth rate and profitability. A debriefing document is prepared periodically
and the product is customized or modified to adapt market requirements and
feedback.

Mind it:

The entire new product development process is an ever
evolving platform where product managers and entire organization learns from
errors, design mistakes, losses. Having the entire team working in close synchronization
will ensure creating and launching successful products. Productivity during
product development can be achieved if, and only if, goals are clearly defined
along the way and each process has contingencies clearly outlined on paper.